FINANCING RAIL PROJECTS IN CENTRAL AND EASTERN EUROPE

The European Bank for Reconstruction and Development (EBRD) was established in 1991 to respond to major political and economic changes in Eastern Europe, and is a publicly owned international financial institution. It finances projects in both public and private sectors through loans, equity investments, and guarantees. Rail projects are now an important part of its plans, and it supports investments to make railways more competitive, improve the economic return of assets, overcome transport bottlenecks, and improve international trade links. More than half of EBRD lending has been directed to rail transport services, mainly rolling stock, rather than transport infrastructure, but EBRD objectives and investments cover both rail infrastructure and train operations. The EBBD requires the railway organisations that it finances to adopt more commercial approaches including business plans and increased private sector involvement. It attempts to pursue an integrated public-private sector strategy, and it has identified six areas needing more private sector involvement. By August 1999, it had signed loan agreements for 13 projects in Russia and Eastern Europe, providing loans of about EUR 515M to finance rail investment. It applies open and fair procedures for awarding public sector contracts.